G.R. Nos. 189158 and 189530
January 11, 2017
JAMES IENT and MAHARLIKA SCHULZE v TULLETT PREBON (PHILIPPINES), INC., Commercial Law; Corporation Code; Liability on Sections 31 and 34; SC held that through a thorough scrutinizing of the different provisions in the Corporation Code including Sections 31 and 34, they only impose civil liability aside from Section 74. SC concludes that had ha d it been the intention of the drafters of the la to define Sections 31 and 34 as offenses, they could have easily included similar language as that found in Section 74. The intention can also be gleaned from the floor deliberations of its proponents.
SERENO,C J.: FACTS: Tradition Group, where petitoners herein are employed, and Tullett are competitors in the inter-dealer broking business. On the Tradition Group's motive of expansion and diversification in Asia, petitioners lent and Schulze were tasked with the establishment Tradition Financial Services Philippines, Inc.
However, Tullett, filed a Complaint-Affidavit with the City Prosecution Office of Makati City against the officers/employees of the Tradition Group for violation of Sections 31 and 34 of the Corporation Code which made them criminally liable under Section 144. Impleaded as respondents in the Complaint-Affidavit were petitioners lent and Schulze, Jaime Villalon ,who was formerly President and Managing Director of Tullett, Mercedes Chuidian who was formerly a member of Tullett's Board of Directors. Villalon and an d Chuidian were charged with using their former positions in Tullett to sabotage said company by orchestrating the mass resignation of its entire brokering staff in order for them to join Tradition Philippines which was evident on their conduct of several meetings with the employees. According to Tullett, petitioners petitione rs lent and Schulze Sc hulze have conspired with Villalon Villa lon and Chuidian in the latter's acts of disloyalty against the company. Petitioners argued that there could be no violation of Sections 31 and 34 of the Corporation as these sections refer to corporate acts or corporate opportunity, that Section 144 of the same Code cannot be applied to Sections 31 and 34 which already contains the penalties or remedies for their violation; and conspiracy under the Revised Penal Code cannot be applied to the Sections 31 and 34 of the Corporation Code. The city prosecutor dismissed the criminal complaint however, on respondent’s appeal to the Department of Justice, the dismissal dismi ssal was reversed finding the arguments of the respondent proper. CA affirmed the decision of the DOJ secretary. ISSUE/S: WoN Section 144 of the Corporation Code appliesto Sections 31 and 34 of the same code, thus, making it a penal offense so that conspiracy can be appreciated and the petitioners can be impleaded? RULING: NEGATIVE. The Supreme Court applied rule of lenity as a principle related to liberal interpretation in favor of the accused in criminal cases. The rule applies when the court is faced with
two possible interpretations of a penal statute, one that is prejudicial to the accused and another that is favorable to him. The rule calls for the adoption of an interpretation which is more lenient to the accused. According to SC, a close reading Section 144 shows that it is not purely a penal provision because it provides that when the violator is a corporation, an administrative penalty is imposed in form of dissolution, which is not a criminal sanction. The Court also added that there is no provision in the Corporation Code using an emphatic language to compel the SC to construe the provision as a penal offense. SC held that through a thorough scrutinizing of the different provisions in the Corporation Code including Sections 31 and 34, they only impose civil liability aside from Section 74. SC concludes that had it been the intention of the drafters of the la to define Sections 31 and 34 as offenses, they could have easily included similar language as that found in Section 74. The intention can also be gleaned from the floor deliberations of its proponents. Quite apart that no legislative intent to criminalize Sections 31 and 34 was manifested in the deliberations on the Corporation Code, it is noteworthy from the same deliberations that legislators intended to codify the common law concepts of corporate opportunity and fiduciary obligations of corporate officers as found in American jurisprudence into said provisions. In common law, the remedies available in the event of a breach of director's fiduciary duties to the corporation are civil remedies. If a director or officer is found to have breached his duty of loyalty, an injunction may be issued or damages may be awarded. A corporate officer guilty of fraud or mismanagement may be held liable for lost profits. A disloyal agent may also suffer forfeiture of his compensation. There is nothing in the deliberations to indicate that drafters of the Corporation Code intended to deviate from common law practice and enforce the fiduciary obligations of directors and corporate officers through penal sanction aside from civil liability. GRANTED. Court of Appeals Resolutions are REVERSED and SETASIDE.
